A gas station selling E5 fuel with 5 percent ethanol. Vietnam hopes to switch fully to ethanol-blended fuels by 2015

The Ministry of Industry and Trade proposed Wednesday that the use of biofuels must be made obligatory from late next year, starting with those containing low levels of ethanol made from cassava.

It suggested that gasoline with 5 percent ethanol, known as E5, should be used from December next year in the five centrally-administered cities of Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, and Can Tho, and the provinces of Quang Ngai and Ba Ria Vung Tau.

From December 2015 it would be the only fuel used nationwide, news website VietNamNet quoted the ministry proposal as saying.

E10 fuel, which has 10 percent ethanol, would be used in the seven localities from December 2016, and nationwide a year later, it said.

Research has found ethanol made in Vietnam safe for engines and reduces emissions of carbon monoxide and hydrocarbon.

But since the biofuel began to be sold commercially in August 2010, few people have been using it.

Deputy Minister of Industry and Trade Le Duong Quang told VietNamNet that people still know little about E5 or E10, and retailers are reluctant to spend money on new storage and pumps for another fuel.

Le Xuan Trinh, deputy general director of PetroVietnam Oil Corporation, said 15,000 cubic meters of E5 were sold in the first nine months of this year, which would only require PetroVietnam's three ethanol factories to run for two and a half days.

The low demand has caused one factory in Quang Nam Province in central Vietnam to close, leaving thousands of cassava farmers in the lurch, he said. The two other factories have scaled down their operations and export to China, South Korea, and the Philippines.

He urged the government to halve the special consumption tax and scrap environment tax on E5.

The ministry estimated that if its proposal is accepted, demand for biofuel could rise to 6.88 billion liters by 2015 and 9.26 billion liters by 2025.